Imports of Vitamin E from China PR- Final findings

Dated March 23 , 2015 | Copy of | Notification | Subject:- Final Findings in the Sunset Review (SSR) anti-dumping investigation concerning imports of Vitamin E originating in or exported from China OR-reg. F.No.15/31/2013-DGAD: WHEREAS, the original investigation concerning imports of Vitamin E (hereinafter referred to as the subject country), originating in or exported from China PR (hereinafter referred to as the subject country), was initiated by the Designated Authority (hereinafter referred to as the Authority) vide Notification No. 14/32/2002-DGAD dated 27th August, 2002. The Preliminary Findings was issued by the Authority vide Notification No. 14/32/2002-DGAD dated 2nd December, 2002 and the provisional anti-dumping duty was imposed by the Department of Revenue vide Notification No. 41/2003-Customs on 7th March 2003. The Final Findings Notification was issued by the Authority vide Notification No. 14/32/2002-DGAD dated 22nd August, 2003; recommending imposition of definitive duty. On the basis of the recommendations made by the Authority in the final findings, a definitive anti dumping duty was imposed by the Central Government vide Notification No. 145/2003-Customs dated  6th October, 2003 on the imports of the subject goods, originating in or exported from the subject country. 2. Whereas, the Designated Authority (DA) had initiated first sunset review vide notification No. 15/10/2008-DGAD dated 7th March, 2008. The final finding with respect to the said first sunset review, was notified by the Authority vide Notification No 15/10/2008-DGAD dated 5th March, 2009. On the basis of this recommendations made by the Authority in the final findings, a definitive anti-dumping duty was imposed by the Central Government vide Notification No.33/2009-Customs dated 27th March 2009 and made the anti dumping duty effective for a period of five years. 3. Whereas, Merck Limited have filed a duly substantiated application on behalf of the domestic industry before the Authority and in accordance with section 9A(5) of the Act, read with Rule 23 of the Anti-dumping Rules, the Authority initiated second sunset review investigation vide Notification dated 24th March, 2014 to review the need for continued imposition of the anti dumping duties in respect of the subject goods, originating in or exported from the subject country, and to examined whether the expiry of such duty is likely to lead to continuation or recurrence of dumping and injury to the domestic industry. The validity of the antidumping duty on the imports of the subject goods from the subject country was extended by the Central Government up to 26th March, 2015 vide Notification No.16/2014-Customs (ADD) dated 9th May, 2014. A. PROCEDURE 4. The procedure described below has been followed with regard to the subject investigation: a) The Embassy of the subject country in New Delhi was informed about the initiation of the investigations in accordance with Rule 6(2) of Customs Tariff Rules, 1995 b) The Authority provided copies of the non-confidential  version of the application to the known exporters and the Embassy of the subject country in accordance with Rule 6(3) supra. A copy of the non-confidential  version of the application was also made available in the public file and provided to other interested parties, wherever requested. c) The Authority forwarded a copy of the public notice to the following known producers/exporters  in China PR (whose names and addresses  were made available to the Authority)  and gave them opportunity to make their views known in writing within forty days from the date of the letter in accordance with the Rules 6(2) & 6(4): (i) M/s Zhejing Nhu Company Limited (ii) M/s. Zheijiang Xinchang Pharmaceuticals Company (iii) M/s. Hangzhou Toyond Biotech Co. Ltd. (iv) M/s. Vega Pharma Limited (v) M/s. Xi’an Rainbow Biotech Co. Ltd. (vi) M/s. Qingdao Sunrise Trading Co. Ltd. (vii) M/s. Anhui Medifarm Co. Ltd. d) No response or submission has been filed by any of the producers/exporters  from the subject country. e) A Market Economy Treatment (MET) questionnaire was also forwarded to all the known  producers/exporters  and  the  Embassy  of  China  PR with the request to provide relevant information to the Authority within the prescribed time. While for the purpose of initiation the Normal value in China PR was considered based on the cost of production of the  subject  goods  in India,  duly  adjusted,  the  Authority  informed  the  known producers/exporters  from China PR that it proposes to examine the claim of the applicant in the light of Para 7 and Para 8 of Annexure I of Anti-dumping Rules, as amended. The exporters/producers   of  the  subject  goods  from  China  PR  were,  therefore,  requested  to furnish necessary information/sufficient  evidence as mentioned in sub-paragraph (3) of paragraph 8 to enable the Authority to consider whether market economy treatment can be granted to the cooperative  exporters/producers.  However,  no response has been received from any of the producers/exporters  of China PR in this regard. f) The Authority forwarded a copy of the public notice to the following known importers/consumers  (whose names and addresses were made available to the Authority) of subject goods in India and advised them to make their views known in writing within forty days from the date of issue of the letter in accordance with the Rule 6(4): (i) M/s C.J Shah & Co., Mumbai (ii) M/s Cadila Pharmaceuticals Ltd., Ahmedabad. (iii) Glenmark Pharmaceuticals Ltd., Mumbai. (iv) Medi Pharma Drug House, Mumbai. (v) Nandlal Bankatlal Pvt. Ltd., Mumbai. (vi) Nav Maharasthra Chakan Oil Mills, Pune. (vii) M/s Sheetal Pharma., Mumbai. (viii) Sundar Chemicals Pvt. Ltd., Chennai. (ix) Universal Medicare Pvt. Ltd., Mumbai g) No response or submission has been filed by any of the importers/ users/ associations or any other interested parties. h) The Period of Investigation (POI) for the purpose of the present review was 1st January, 2013 to 31st  December, 2013. The examination of trends in the context of injury analysis covered the periods January-December 2010, January-December 2011, January- December 2012 and the POI. i) The domestic industry had relied upon the data from the secondary sources i.e. IBIS. Request was made to the Directorate General of Commercial Intelligence and Statistics (DGCI&S) to arrange details of imports of subject goods for the injury period including the POI and also the post-POI. Since during the POI the volume of the imports of the subject goods from the subject country, is higher as per the IBIS source, the Authority has relied upon the data from the IBIS source in the present investigation. j) Exporters, producers, importers and other interested parties who have neither responded to the Authority nor supplied information relevant to this investigation have been treated as non-cooperating parties by the Authority. k) The Authority had made available non-confidential version of the evidence presented by interested parties in the form of a public file kept open for inspection by the interested parties as per Rule 6(7) of Custom Tariff Rules, 1995. l) The Authority has examined the information furnished by the domestic producers to the extent possible on the basis of guidelines laid down in Annexure III to work out the cost of production and the non-injurious price of the subject goods in India so as to ascertain if anti-dumping duty lower than the dumping margin would be sufficient to remove injury to the domestic industry. m) In accordance with Rule 6(6) of the AD Rules, the Authority also provided opportunity to all interested parties to present their views orally in a public hearing held on 9th January, 2015, which was attended only by the domestic industry and their representatives.  The domestic industry which only presented its views in the oral hearing was requested to file written submissions of the views expressed orally. n) The submissions  made by the domestic industry and other interested parties during the  course  of  the  investigation  and  considered  relevant  by  the  Authority  have  been examined and addressed in this investigation. o) Verification of the information and data submitted by the interested  parties  was carried out to the extent deemed necessary. p) Information provided by the interested parties on confidential  basis was examined with regard to sufficiency of the confidentiality claim. On being satisfied, the Authority has accepted the confidentiality claims wherever warranted and such information has been considered as confidential and not disclosed to other interested parties. Wherever possible, parties providing information on confidential basis were directed to provide sufficient non- confidential version of the information filed on confidential basis. q) Wherever, an interested party has refused access to, or has otherwise not provided necessary information during the course of present investigation, or has significantly impeded the investigation,  the Authority has recorded these essential facts on the basis of the ‘facts available’ and treated such parties as non-cooperative. r) A Disclosure Statement containing the essential facts in this investigation which would have formed the basis of the Final Findings was issued to the interested parties on 10.03.2015. The post Disclosure Statement submissions  were received from the Domestic Industry only and have been considered, to the extent found relevant in this Final Findings Notification. s) The submissions made by the interested parties considered relevant by the Authority have been addressed in this Final Findings Notification. o) ***in this Final Findings Notification represents information furnished by an interested party on confidential basis and so considered by the Authority under the Rules. p) The exchange rate for the POI has been taken by the Authority as Rs.58.95 = 1 US$. B. SCOPE OF PRODUCT UNDER CONSIDERATION  AND LIKE ARTICLE 5.  The product under consideration (PUC) in the previous investigations as well as the present Sunset Review investigation is “Vitamin-E in all forms, excluding natural forms”, originating in or exported from China PR. The present investigation being a 2nd sunset review, the investigation covers the product as in the original and subsequent sunset review investigations. Vitamin E Acetate is the stable form of Vitamin E, most often used in cosmetic formulations for its skin care benefits. Vitamin E protects cell membranes from damage by oxygen free radicals.   It can prevent premature aging of the skin induced by UV irradiation and lipid peroxidation. Whereas, Vitamin E feed grade is used in the preparations for animal feed. 6. The Authority notes that none of the interested parties has contested the meaning and scope of the product under consideration  as defined by the Authority.  The Authority further  notes from the information available on record that the product under consideration produced by the domestic industry is like article to the goods imported from the subject country. Product under consideration  produced  by the domestic industry and imported  from the subject country are comparable   in  terms  of  physical   &  chemical   characteristics,   manufacturing   process  & technology,  functions  & uses, product  specifications,  pricing,  distribution  & marketing  and tariff classification of the goods. It is further noted that the Designated Authority has examined the issue of product  under consideration  and like article in the previous two investigations, which is relied upon. The goods produced by the domestic industry and imported  from the subject   country  are  like  articles   in  terms  of  the  Rules.   The  two  are  technically  and commercially substitutable. 7.  The product, Vitamin E-Acetate is classified in Chapter 29 under Customs Classification 2936 28 00 of the Customs Tariff Act whereas Vitamin-E (50% dry powder) feed grade is classified in Chapter 23 under Customs Classification 2309 90 10. However, the above classification is indicative only and is no way binding on the investigation. C. DOMESTIC INDUSTRY AND STANDING Submissions by the Domestic Industry 8. The following are the submissions made by the domestic industry with regard to scope of the domestic industry and standing: (i) The petition has been filed by M/s. Merck Ltd. Another company M/s. Soham Organics Ltd., Nashik also produces the product. The other manufacturer has no objection to the petition though they have not submitted any letter to that effect. (ii) The petitioner has 84% share in the Indian production during the POI and, therefore, constitutes domestic industry. Further, the scope of domestic industry and standing are not relevant in a sunset review. Submissions by producers/exporters/importers/other interested parties 9. None of the producers/exporters/importers/other interested parties has made any submissions in this regard. Examination by Authority 10. The  Authority  notes that the application  in the present  Sunset  Review investigation  has been filed by M/s Merck Ltd. as the domestic industry. 11. The Authority further notes that M/s Soham Organics also produces the product. As per the information provided by the domestic industry, M/s Merck Ltd commands 84% share in Indian production in the POI. The production of the applicant constitutes  major portion of the total production of the subject goods and, therefore, applicant constitutes the domestic industry. Moreover, as regards the standing and scope of domestic industry, there is no opposition from any interested  party in the present  investigation. In view of the above position  and having regard to the Rules and information on record, the Authority holds that  M/s Merck  Ltd., accounts for a major proportion in Indian production  of the subject goods and constitutes domestic industry within the meaning of the Rules and has standing under the Rules. D. Market Economy Treatment, Normal Value, Export Price and Determination of Dumping Margin – Methodology, Parameters and Likelihood of Continuation of Dumping. Submissions by the Domestic Industry 12.Following are the submissions made by the domestic industry: i. Since no questionnaire response has been filed by any of the Chinese companies, the subject country should be treated as non-market economy. ii. In the previous sunset review investigations, the Authority had not granted market economy treatment to any of the exporters from China and determined the normal value in China on the basis of the constructed normal value based on the estimated cost of production of the subject goods in China with reasonable profit in terms of Para 7 & 8 of the Annexure 1 to the said Rules as amended. Authority should consider the same methodology to calculate the normal value for China PR in the current investigation. iii. The Normal value in China can be determined on the basis of (a) price in India, and (b) cost of production in India, duly adjusted, including selling, general and administrative expenses and profit. Normal Value in China should be determined on the basis of cost of production in India, duly adjusted. iv. The petitioner has claimed consideration of the same methodology to calculate the normal value for China PR in the current investigation also as none of the exporters/ producers from China have responded to the initiation of investigation. v. The petitioner considered IBIS data to assess the volume and value of subject import in India. However, the price reported to Indian customs is unreliable. This is established by the fact that the price at which Vitamin-E has been exported from China to the rest of the world is materially lower than the price at which the goods have been exported to India. The prices  at  which  the  goods  have  been  reported  in  Indian  customs  are  at  the  prevailing benchmark price for the product in India. The price at which the imported goods have been resold in India, as evidenced by the resale price of the product, is materially lower. vi. In view of the above, petitioner requests the Designated Authority to ignore the prices reported to Indian customs and considers the resale price of the product for constructing the import price. Petitioner requests the Designated Authority to kindly consider the definition of the export price under the law. In the present case, since the price at which the goods have been exported is unreliable,  the export price is required to be constructed  from the resale price in India. vii. It would be seen from calculations  of dumping  and injury margin  on the basis of country-wise exports from China as per China Customs data that exports from China to third countries are at dumped prices. It would be seen that the dumping margin and injury margin in respect of majority of the countries is quite significant. Submissions by producers/exporters/importers/other interested parties 13. None of the producers/exporters/importers/other interested parties has made any submissions in this regard. Examination of Market Economy Claims 14. At the stage of initiation, the Authority proceeded with the presumption by treating China PR as a non-market economy country. Upon initiation, the Authority advised the producers/exporters  in China  to respond  to the notice of initiation  and provide information relevant  to determination  of their  market  economy  status.  The Authority sent  copies  of the MET questionnaire  to all the known producers/exporters  for rebutting  presumption  of non- market economy in accordance with criteria laid down in Para 8(3) of Annexure-I to the Rules. The Authority also requested Government  of China to advise the producers/exporters  in their country  to  provide  the  relevant  information.  However,  none  of  the  Chinese producers/exporters  have filed any response. The Authority notes that in the past three years China PR has been treated as a non-market  economy country in anti-dumping investigations by India and other WTO Members.  In view of the above position,  the Authority  treats  the subject country as non-market economy in the present investigation. Determination of Normal Value 15. The Authority notes that none of the producers and exporters of the subject goods from the subject country has submitted the exporter’s questionnaire response and market economy questionnaire response, consequent upon the initiation notice issued by the Authority and rebutted the non-market economy presumption. In view of the above position and in absence of rebuttal of non-market economy presumption by the respondent Chinese company, the Authority considers it appropriate to proceed with para-7 of Ann.I to the Rules for determination of normal value in case of China PR. 16. Para 7 of Annexure I of the Anti-dumping Rules provide that: “In case of imports from non-market economy countries, normal value shall be determined  on  the basis  of the price  or  constructed  value  in the market  economy  third country, or the price from such a third country to other countries, including India or where it is not possible,  or on any other reasonable  basis, including  the price actually  paid or payable  in India for the like product,  duly adjusted if necessary,  to include a reasonable profit  margin.  An  appropriate  market  economy  third  country  shall  be  selected  by  the Designated Authority in a reasonable manner, keeping in view the level of development of the country concerned and the product in question, and due account shall be taken of any reliable information made available at the time of selection. Accounts shall be taken within time limits, where appropriate, of the investigation made in any similar matter in respect of any other market economy third country. The parties to the investigation shall be informed without any unreasonable delay the aforesaid selection of the market economy third country and shall be given a reasonable period of time to offer their comments.” 17. None of the exporters/producers  from the subject  country has cooperated  with the Authority and responded to the present investigation. Further none of the interested parties has provided any other alternate basis as defined in the Rules on which normal value can be determined.  In view of the above position and considering China as a non-market  economy, the Authority has determined the normal value in accordance with Para 7 of Annexure I of the AD Rules. In the absence of sufficient information on record regarding the other methods as are  enshrined  in  Para  7  of  Annexure  I  of  the  Anti-dumping   Rules,  the  Authority  has determined  the  normal  value  by  adopting  the  method  of  “other  reasonable  basis”.  The Authority has, therefore,  constructed  the normal value for China PR on the basis of the best estimates of cost of production of the applicant domestic industry in India. The Authority has also provided for reasonable profit as per its consistent practice. Accordingly, the constructed normal value for Chinese exporters as determined is given in the dumping margin table below. Export Price 18. None of the exporters in the subject country has provided any information that can be used for determination  of the export price. The applicant has claimed that the prices declared in Bill of Entry to Indian customs is unreliable because of the benchmark form of anti dumping duty imposed  on the product.  They  are alleging  it on the grounds  that  the price  at which Vitamin-E has been exported from China to rest of the world is materially lower than the price at which the goods have been exported to India. The subject goods have been exported to India nearly  at  the  prevailing   benchmark   price  for  the  product   as  notified   in  earlier  ADD Notification.  The  applicant  has  submitted  one  resale  invoice  relating  to  post-POI  period, wherein  the price is lower than the import  price,  thereby supporting  their claim that prices declared to Customs are incorrect and is just to avoid payment of customs  duty under ADD notification. 19. The Authority  considers  it inappropriate  to determine  export  price  on the basis of reported resale price in India. Also the goods are coming into India at approximately the same price  from  all  the  countries.  None  of the exporters  from China  have  cooperated  with  the Authority  and  therefore  export  price  cannot  be  determined  on  the  basis  of  questionnaire response.  The Authority has determined the export price for all exporters  from China PR on the  basis  of  IBIS  import  information.  These  prices  are  CIF  export  price  to  India.  The adjustments from the CIF prices have been made as per facts available on record. Accordingly, the export price has been adjusted for commission,  port expenses,  bank charges, inland, sea freight and marine insurance. The Net Export Price worked out by the Authority is given in the dumping margin table below. Dumping Margins 20. Comparing the constructed normal value with the export price at ex-factory level as determined above, the dumping margin for all the producers/exporters  in the subject country is determined as follows:- E. Injury Determination and Examination of Injury and Causal Link Submissions by the domestic industry 21. The domestic industry has made the following submissions  with regard to the injury and causal link: i. There is continued dumping of the product under consideration from China. ii. Dumping of the product under consideration  is likely to intensify from the subject country should the current anti-dumping duty cease. iii. Volume of dumped imports has increased in spite of current anti-dumping duties. iv. Price undercutting is significantly positive. Further, Chinese exporters are dumping the product to various other countries in significant volumes as is evident from the price undercutting determined for the major importing countries. v. Performance of the domestic industry in terms of profits, return on investments, inventories etc. has deteriorated in the current Period of Investigation. vi. Even though performance  of the domestic industry improved on account of production, sales and capacity utilization; the performance of the domestic industry was clearly sub-optimal despite anti dumping duty imposed, as is clearly established by the past levels of capacit y utilization of the domestic industry and suspension of production by the domestic industry in the post-POI period. vii. Despite anti dumping  duty in force,  the price parameters  of the Domestic Industry  have  declined.  Should  the current  anti  dumping  duties  cease,  the Domestic Industry would be forced to sell its product at a price comparable to import prices. This would mean significant  financial losses, negative return on investment  and significant cash losses. viii. Following parameters show that injury to the domestic industry has been caused by the dumped imports and thereby establish causal link: a) The dumped imports from the subject country have continued to enter the Indian port in the period of investigation. b) Subject imports are available at prices lower than domestic prices. Once anti- dumping duty is discontinued, the dumped imports will cause further injury. c) Imports of the product under consideration have increased over the injury period. Consequently, the market share of the domestic industry has declined. d) The capacities available with the Chinese producers and their export orientation suggest that in case anti dumping duty is discontinued; the volume of dumped imports would surge further. e) The imports are entering the country at low and dumped prices and are undercutting the prices of the domestic industry. The domestic industry would, therefore, be forced to reduce the prices in the event of cessation of anti dumping duty. f) The imports are undercutting the domestic prices. Resultantly, the domestic industry is already faced with price depression in the market. This has resulted in financial losses to the domestic industry, which would increase further in the event of cessation of anti dumping duty. g) Performance of the domestic industry has deteriorated in respect of parameters such as profits, return on investment and cash flow as a result of price depression. h) In the absence of an anti dumping measure, the likelihood of continuation of dumping and injury cannot be ruled out. i) Calculations of dumping and injury margin in respect of exports from China to all third countries to which China has exported, including dumping margin and injury margin on the basis of weighted average export price show that the dumping margin and injury margin in respect of majority of the countries are significant. Submissions by producers/exporters/importers other interested parties 22. None of the producers/exporters/importers/other  interested  parties  has  made  any submissions with regard to injury to the domestic industry. Examination by the Authority 23. In consideration of the various submissions made by the domestic industry in this regard, the Authority proceeds to examine the current injury, if any, to the domestic industry before  proceeding  to examine  the likelihood  aspects  of dumping  and injury on account  of imports from the subject country. 24. Rule 11 of Antidumping Rules read with Annexure–II provides that an injury determination shall involve examination of factors that may indicate injury to the domestic industry, “…. taking into account all relevant facts, including the volume of dumped imports, their effect on prices in the domestic market for like articles and the consequent effect of such imports on domestic producers  of such articles….”  In considering the effect of the dumped imports on prices, it is considered necessary to examine whether there has been a significant price undercutting  by the dumped imports  as compared  with the price of the like article in India,  or whether  the effect  of such imports  is otherwise  to depress  prices  to a significant degree  or  prevent  price  increases,  which  otherwise  would  have  occurred,  to a  significant degree. 25. For the examination of the impact of the dumped imports on the domestic industry in India,  indices  having  a  bearing  on the  state  of the  industry  such  as  production,  capacit y utilization, sales volume, stock, profitability, net sales realization, the magnitude and margin of dumping, etc. have been considered in accordance with Annexure II of the rules supra. 26. According to Section 9(A)(5) of the Customs Tariff Act, anti-dumping duty imposed shall, unless revoked earlier, cease to have effect on the expiry of five years from the date of such imposition,  provided that if the Central Government,  in a review, is of the opinion that the cessation of such duty is likely to lead to continuation or recurrence of dumping and injury, it may, from time to time, extend the period of such imposition  for a further period of five years and such further period shall commence from the date of order of such extension. 27. For the purpose of current injury anal ysis, the Authority has examined the volume and price effects of dumped imports of the subject goods on the domestic industry and its effect on the prices and profitability to examine the existence of injury and causal links between the dumping and injury, if any. The Authority has examined injury to the domestic industry by considering information relating to M/s Merck Ltd., constituting domestic industry under the Rules. Accordingl y, the volume and price effect of dumped imports have been examined as follows: VOLUME EFFECT Volume effect of dumped imports and impact on domestic industry Demand and Market Share 28. The demand and market share are analyzed as below: 29. The Authority has determined  demand or apparent  consumption  of the product in the country  as the sum of domestic  sales  of the Indian producers  (the sale of other producer  is  an  estimated  figure  by  the  petitioner)  and  imports  from  all  sources  as available from IBIS. The petitioner has claimed import volumes from China to be considered  on  the  basis  of  exports  to  India  from  China  as  per  China  Customs,  as submitted  by  the  petitioner.  However,  the  Authority  has  considered  injury  analysis based on IBIS import data. Based on this, the demand has been assessed, as mentioned in the above table.  The Authority  notes  that  demand  for the product  in the  countr y during POI increased vis-à-vis the base year as well as the immediate preceding year. 30. The Authority further notes that the market share of the domestic  industry  has declined  during  the  POI  as  compared  to  the  base  year  as  well  as  the  immediate preceding  year.  On the  contrary,  the share  of imports  from the subject  country  has increased during the POI as compared to the base year. Import Volume & market share 31. With regard to the volume of the dumped imports,  the Authority is required to consider  whether  there  has  been  a significant  increase  in  dumped  imports  either  in absolute terms or relative to production or consumption in India. 32. The Authority notes that the volume of imports from the subject country on this basis is significant  in absolute terms. Further, the imports from the subject country vis-à-vis domestic demand and production have also increased during the POI as compared to the base year. PRICE EFFECT Price effect of dumped imports and impact on domestic industry 33. The impact on the prices of the domestic industry on account of imports of the subject goods from the subject country have been examined with reference to price undercutting,  price  underselling,  price  suppression  and  price  depression.  For  the purpose of this analysis the cost of production,  net sales realization (NSR) and the non-injurious  price (NIP) of the domestic industry have been compared with landed value of imports from the subject country. A comparison for subject goods during the period of investigation  was made between the landed value of the dumped imports and the domestic selling price in the domestic market. In determining the net sales realization   of  the  domestic  industry,  taxes,  rebates,  discounts  and  commission incurred by the domestic industry have been adjusted. The price underselling  is an important  indicator  of assessment  of injury;  thus,  the Authority  has worked  out a non-injurious  price and compared  the same with the landed value to arrive at the extent  of  price  underselling.  The  non-injurious  price  has  been  evaluated  for  the domestic industry in terms of the principles outlined in Annexure-III to the Rules by appropriately considering the cost of production for the product under consideration during the POI. The landed value of subject imports has been considered on the basis of export price based on IBIS import data. The position is as follows: 34.   It is noted from the table above that there is no price undercutting in the POI, even though the price undercutting was positive in previous years. The applicant has claimed that exports from China to third countries show significant price undercutting and price underselling on weighted average basis as well as in majority of the third countries. The applicant has provided details of reported price undercutting and price underselling considering  the price  at  which  goods  have been  exported  by China  to various  third countries which shows that both the price undercutting and price underselling are quite significant. Price Underselling 35. It is noted that the landed price of imports  of subject  goods  from the subject country is below the non-injurious  price of the domestic industry, resulting in price underselling. Price Suppression and Depression 36. To examine the price suppression and depression effects of the dumped imports on the domestic prices, the trend of net sales realization of the domestic industry has been compared with the cost of sales. The data given in table below shows that the cost of sales of the domestic industry has declined in 2011,  remained at the same level in 2012  and then increased  significantly  in the POI. On the other  hand,  the selling price has declined over the injury period, resulting in significant losses to the domestic industry in the POI.  This shows that the domestic industry was affected by price  depressing  and  suppressing   effects  of  dumped  imports  from  the  subject country. Examination of other economic parameters of the domestic industry 37.  Annexure II to the Anti-dumping Rules requires that a determination of injury shall involve an objective examination of the consequent impact of these imports on domestic producers  of like product. The Rules further provide that the examination of the  impact  of  the  dumped  imports  on  the  domestic  industry  should  include an objective and unbiased  evaluation  of all relevant  economic  factors  and indices having a bearing on the state of the industry, including actual and potential decline in sales, profits, output, market share, productivity, return on investments or utilization of  capacity;  factors  affecting  domestic  prices,  the  magnitude  of  the  margin  of dumping;  actual  and  potential  negative  effects  on  cash  flow,  inventories, employment,  wages, growth, ability to raise capital investments.  An examination of performance of the domestic industry reveals that the domestic industry has suffered material injury. The various injury parameters  relating to the domestic industry are discussed below. Sales, Capacity, Production, Capacity Utilization and Inventories 38. The Authority notes  from  the table  below  that  there  is  no  change  in  the capacity for the product under consideration. Production and sales volume of the domestic industry have increased over the injury period. The capacity utilization has also improved as a result of increase in production due to outsourcing. The petitioner has claimed that the capacity is still under-utilized. This is in spite of the fact that the demand in the country is significantly higher than the petitioner’s capacity. The petitioner has further claimed that they were forced to curtail and even suspend production in the post-POI period due to significant  rise in inventories.  This shows that  increase  in domestic  sales  is not  proportionate  to the increase  in production which is leading to piling up of stock. Profit/loss, return on investment and cash flow 39. The return on investment,  profit/loss before and after interest and cash profit are as shown in the table below: 40. The Authority notes that the cost of sales has declined in 2011, remained at the same level in 2012 and then increased significantly in the POI. The reason for increase in cost mentioned by the DI is that there is significant increase in price of one of the raw material  namely Isophytol.  However,  the selling price has declined over the injury period, resulting in significant  losses to the domestic industry. It is also noted that the domestic  industry  has incurred  losses  during the POI. Further, return  on  investment  was  significantly  negative  in  the  POI.  The  petitioner  has claimed that the imports are depressing the domestic prices, leading to deterioration in profitability of the domestic industry. Market Share 41. The data given in the table below shows that  the market share of domestic producers  has declined;  whereas  market share of imports  from the subject  countr y has increased with reference to the preceding year. Employment and wages 42. From the table given below, the Authority notes that both the employment and wages of the domestic industry has increased during the POI as compared to the base year. It is, however,  noted that  the petitioner  being multi-product  company,  these parameters may not show current and potential adverse impact. Productivity 43. The Authority notes  from the table below  that productivity  per  day of the domestic industry during POI has increased as compared to the base year. However, the productivity  per  employee  shows  a  decline  as  the  number  of  employees  has increased. This could also be one of the factors for increased costs. Magnitude of Dumping Margin 44. The Authority notes that the dumping margin of the imports of the subject goods from the subject country is positive. Growth 45. The Authority notes that the domestic industry has shown positive growth in some of the economic parameters such as production and domestic sales. However, price  parameters such as profit, cash profit and return on investments have deteriorated during the POI as compared to the base year. Ability to raise Capital Investment 46. Since the domestic industry is a multi-product  company,  its ability to raise capital investment  has not been affected due to dumping of the subject goods from the subject country. F. Causal Link 47. The Authority examined whether other known factors could have caused injury to the domestic industry. i. Imports  from  Third  Countries:  -  The  Authority  notes  that  imports  of product  under  consideration  from  other  countries  are  significant  in  volume.  The applicant has submitted that imports from third countries are at a price slightly higher than the import price from China. It has been claimed that the exporters  from third countries are being forced to sell at the prices offered by Chinese exporters so as to compete  with them. The Authority notes from the information  available  on record that the claimed injury cannot be attributed to imports from third countries. ii. Contraction in Demand: - The Authority notes that there is no contraction in  demand  as  the  demand  of  the  subject  goods  in  the  country  has  consistently increased over the injury period. iii. Pattern  of consumption:  -  It  is  noted  that  no significant  change  in the pattern of consumption for the subject goods has come to the knowledge of the Authority, nor any interested part y has made any submission in that regard. iv. Conditions of competition: - The Authority notes that the investigation has not shown that conditions of competition or trade restrictive practices are responsible for the claimed injury to the domestic industry. v. Developments   in   technology:   -  The   Authority   also   notes   from   the information available on record that the investigation has not shown that the claimed injury could be due to change in technology. of  the  domestic  industry  is  not  relevant  since  the  price  and  profitability  of  the domestic  industry  has  been  segregated  by the  Authority  for  domestic  and  export markets separately for the purpose of assessing injury to the domestic industry. G. Likelihood of dumping and injury Submissions by the domestic industry 48. Following are the submissions made by the domestic industry: i. Exporters  in  the  subject  country  have  capacities  far  in  excess  of  Indian demand. In case of revocation  of anti-dumping  duty, the volume of subject goods’ imports is bound to increase further. ii. Production  capacity available  with some  of the Chinese  producers  are as below, while the actual production  capacity in the country may be in the range of 55000 to 60000 MT per annum (obtained from online sources): iii. The exporters from China PR have very high export orientation worldwide. The  export  percentage  of  the Chinese  companies  varies  from  81-100% (obtained from online sources): iv. Majority  of  the  producers  of  the  product  under  consideration  in  China producing  Vitamin  E are state owned/controlled  enterprises.  Chinese  Government has major stake in shares or they control the management. The objective of these companies  is therefore  only somehow getting business and not the prices at which they would  sell  the product.  It  would  be seen  that  about  80%  of exports  of the product under consideration from China are by state owned/ controlled entities. v. Dumping margins in the previous two investigations were significantly high. vi. The  performance  of  the  domestic  industry  was  sub-optimal  despite  anti dumping duty was in force. vii. Imports from the subject country would undercut the prices of the domestic industry in the Indian market in the absence of anti-dumping duty. viii.The landed price of imports is substantially below the cost and selling price of the domestic industry. Thus, in the event of cessation of current anti-dumping duty and  if  the  domestic  industry  chooses  to  sell  at  the  import  prices,  the  domestic industry would suffer significant financial losses. ix. The  exporters  and  producers  from the subject  country  have  continued  to export  the  material  at  the  dumped  prices  even  after  the  imposition  of  the  anti- dumping duty. There is no reason to consider that revocation of duties in the present case would not result in intensified dumping from China PR. x. In the event of revocation of the anti-dumping  duty, the product is likely to be dumped more intensively and undercut the prices of the domestic industry. Submissions by producers/exporters/importers/other interested parties 49. None of the producers/exporters/importers/other interested parties has made any submissions in this regard. Examination by the Authority 50. The present investigation is a sunset review of anti-dumping duties imposed on the imports  of subject  goods  from China PR. Under the Rules, the Authority is required to determine whether continued imposition of antidumping duty is warranted. This also requires examination as to whether the duty imposed is serving the intended purpose of eliminating injurious dumping. In the present investigation, as there are continued  dumped  imports,  the Authority  is  not required  to examine whether revocation of duty is likely to lead to continued dumping of the product. However, considering the fact that the dumping margin in the original as well as the present investigation is positive and that there are favorable market conditions in the Indian market as far as demand and price for the subject goods are concerned, the Authority has reason to believe that dumping may intensify if the anti dumping dut y is revoked. It is a matter of fact that despite the anti-dumping measures in force, the subject  country  could  still  dump  the  subject  goods  in  the  Indian  market.  The following analysis would show about the likelihood of continuation/intensification of dumping  and  injury  to  the  domestic  industry  in  the  event  of  revocation  of  anti dumping duty: (I) Dumping margin, price undercutting and injury margin in respect of exports to third countries 51. The applicant has also provided information showing that exports from China to third countries are at prices materially below the normal value. The petitioner has provided   details   of   dumping   margin,   injury   margin   and   price   undercutting considering the price at which goods have been exported to third countries. 52. The Authority has also determined dumping margin and injury margin if the imports  from  China  were  to be  made  at  prices  at which  China  had  exported  to various third countries based on the data provided by the Domestic Industry. It may be noted from the  Table  given  below  that  both  the  dumping  margin  and  injur y margin are quite significant. (i) Level of current and past dumping margin 53. The level of dumping margin both in the original, first sunset review as well as present investigation is significant. Despite significant demand in the country, the domestic industry could not utilize its full capacit y. Further, the import of the subject goods from the subject country still continues to be at dumped prices. Given the level of price undercutting, price underselling and price depression and considering the capacity in China and demand in India, the volume of dumped import is likely to increase further in the event of revocation of anti-dumping duty. (ii) Price attractiveness of Indian market 54. The price at which the subject  goods  are being exported  by China  PR to India is an indicator of the likelihood of continuation/intensification of dumping. At the current  landed price  in India,  there is  no price  undercutting  during  POI.  The applicant has provided information which shows that exports from China to third countries are at prices materially below the selling price of the domestic industry. It is therefore noted that, with the revocation  of anti-dumping  duty, the Indian prices would be too attractive for the Chinese producers to intensify their exports to India at dumped prices and there is strong likelihood that Indian consumers  would resort to large scale imports of the subject goods from China.. (iii) Export orientation of Chinese producers 55. From the available information it is  evident  that  the  Chinese  producers/exporters   are  very  much   export  oriented.   Considering   the  high  demand   and favorable market conditions  for the subject goods in India and the high production capacity and export orientation of the Chinese producers, the Authority holds that if the existing  antidumping  duties  are withdrawn,  the entire  demand  for the subject goods in India can be catered by the Chinese producers. (iv) Huge Production Capacity in China 56. As per the information furnished by the domestic industry, the producers of the subject goods in China hold production capacity of the subject goods far more than Indian demand. In the event of revocation of anti-dumping duty and considering the Chinese  export  orientation,  the producers  in China  are  capable  of overtaking  the Indian manufacturing sector engaged in subject goods. H. Magnitude of Injury and injury margin 57. The  non-injurious   price  of  the  subject  goods  produced  by  the  domestic industry as determined by the Authority in terms of Annexure III to the AD Rules has been compared with the landed value of the exports from the subject country for determination of injury margin during the POI and the injury margin so worked out is as under: 58. It is noted that the level of injury margin, as above, is considered significant. J. INDIAN INDUSTRY’S INTEREST & OTHER ISSUES: 59. The Authority notes that the purpose of anti-dumping duties, in general, is to eliminate injury caused to the domestic industry by the unfair trade practices of dumping so as to re-establish a situation of open and fair competition in the Indian market, which is in the general interest of the country. Imposition of anti-dumping measures  would not restrict imports from the subject country/territory  in any way, and, therefore, would not affect the availability of the product to the consumers. 60. It is recognized that the imposition  of anti-dumping  duties might affect the price levels of the product manufactured  using the subject goods and consequently might  have some influence  on relative competitiveness  of this product.  However, fair  competition  in  the  Indian  market  will  not  be  reduced  by the  anti-dumping measures, particularly if the levy of the anti-dumping duty is restricted to an amount necessary to redress the injury to the domestic industry. On the contrary, imposition of anti-dumping  measures would remove the unfair advantages gained by dumping practices, would prevent the decline in the performance of the domestic industry and help maintain availability of wider choice to the consumers of the subject goods. K.  POST  DISCLOSURE  STATEMENT  SUBMISSIONS  BY  THE  INTERESTED PARTIES 61. The  Domestic  industry  as repeated  their  claims  and  submissions.  The views of the Domestic Industry in brief are as below: a) Non-injurious price may be re-determined confirming to AD Rules. (b) Product  under consideration  continues to be exported to India below its normal value resulting in dumping from the subject country. (c) Both dumping  margin and injury margin in the current Period of Investigation may be considered on the basis of dumping in third countries for the purpose of determining the quantum of anti dumping duty protection required for the domestic industry in the present case. (d)  Domestic  Industry  has  once  again  suffered  injury  in  spite  of  existing  anti dumping duty due to form of measures. (e) The anti dumping duty is required to be determined on the basis of dumping and injury determined for third countries. (f) The anti  dumping  duty is required  to be modified  to fixed  form and the duty expressed in US$ terms. L. EXAMINATION  OF THE POST DISCLOSURE COMMENTS 62.     The NIP for the domestic industry has been determined in terms of the principles outlined in Annexure-III to the AD Rules. The Domestic Industry has furnished the data of China Customs for their claims of benefit based on third country exports. However, the Authority is not relying on third country data provided by Domestic Industry as it is not verifiable. The continuity of injury has been established in above paras and the fact of likelihood of dumping and injury in case of removal of anti-dumping  duty has also been established in above paras. Further, it is noted that the anti dumping dut y which is in force for last ten years has not been able to prevent the injurious effect of dumping of goods by the subject country and therefore it is recommended  to impose fixed form of anti dumping duty instead of benchmark. M. CONCLUSION 63. After examining the submissions  made by the domestic industry and issues raised     therein; and considering the facts available on record, it is concluded that the product under consideration has been exported to India from the subject country below its associated  normal  value,  thus,  resulting  in dumping  of the product.  The domestic industry has suffered material injury in respect of the subject goods. The material injury has been caused by the dumped imports from the subject country. O. RECOMMENDATIONS 64. It is  noted  that  the  investigation  was  initiated  and  notified  to all  interested parties and adequate opportunity was given to the domestic industry, exporters, importers and other interested parties to provide positive information  on the aspects of dumping, injury and the causal link. Having initiated and conducted investigation  into dumping, injury  and  the  causal  link  thereof  in terms  of the  AD  Rules  and  having  established positive dumping margins as well as material injury to the domestic industry caused by such dumped  imports,  it is felt that the imposition  of definitive  anti dumping  duty is required to offset dumping and consequent injury. Therefore, the Authority recommends imposition  of definitive  anti-dumping  duty on imports  of the subject  goods  from the subject country in the form and manner described hereunder. 65. Having regard to the lesser duty rule followed by the Authority, Authority recommends imposition of definitive anti-dumping duty equal to the lesser of the margin of dumping and the margin of injury, so as to remove the injury to the domestic industry. Accordingly, definitive antidumping duties as per the amount specified in the table below are recommended  to be imposed  from the date of the Notification to be issued by the Central Government, on all imports of the subject goods originating in or exported from the subject country. Note:- The amount for the purposes of column (9) above, for concentrations other than those specified in column (4) shall be calculated on pro rata basis. 66. Landed value of imports for the purpose of this Notification shall be the assessable value as determined by the Customs under the Customs Act, 1962 (52 of 1962) and includes all duties of customs except duties under sections 3, 3A, 8B, 9 and 9A of the said  Act. 67. An appeal against the order of the Central Government  arising out of these findings shall lie before  the  Customs,  Excise  and  Service  Tax  Appellate  Tribunal  in accordance with the Customs Tariff Act.

(J K Dadoo) Designated Authority